However, it appears that fraudsters have found this technology to be extremely useful in laundering money, stealing identities, and running various scams.
Some platforms do not require a user’s identity verification, allowing fraudsters to explore new methods without risking their own money. This allows them to defraud both companies and their customers without fear of repercussions.
Blockchain-based transaction crime reached a record $7.8 billion in 2021, with hacks constantly looming, so it is apparent that many metaverses are vulnerable to scams.
How Metaverse Scams Work
The metaverse and the wider crypto-related ecosystem can portend a wide range of risks to cryptocurrency-based businesses and individuals.
In the metaverse world, for example, there are already or soon to be implemented several schemes and techniques, and experts believe that new methods unique to these platforms will also be developed.
1. Fake Reviews
Reputational damage from fake reviews can be severe, especially on new platforms that depend on transparency with their users to succeed, maintain a stable token price, and build a loyal following. A decrease in token value and a loss of business can easily be the result of negative reviews left by automated users.
2. Rug Pulls
While Squid Game’s play-to-earn metaverse game is well known, the rug pull is a concept inspired by Netflix’s Squid Game. The movie is associated with an opportunistic bad actor. SQUID’s value plummeted as soon as it was discovered that the coin’s developers were nothing more than scam artists.
3. Multi Accounting
The use of multiple accounts on a single metaverse platform can be used by fraudsters to launder money or take advantage of promotional offers. If the NFTs are sold to an honest party, the fraudster can withdraw the dirty money from another account.
4. Virtual World Fraud
Keep in mind that the issues being examined have existed in virtual worlds like The Sims, World of Warcraft, and Second Life long before cryptography was invented. Furthermore, there is an argument to be made that gaming companies in this area should be better prepared.
5. Scam Projects
For as long as NFTs and crypto are not regulated, they will continue to be a breeding ground for scams and intellectual property issues. Vice, for example, has already covered the disappearance of a $2.7 million NFT project developer in late 2021.
6. Irreversible Transactions
The blockchain’s open-record information has been hailed for its transparency, making crypto a popular investment option. However, once a transaction has been completed, it is nearly impossible to reverse it. Compared to brick-and-mortar stores, this may be disappointing to some consumers.
7. Data Breaches
Unfortunately, email data leaks are an increasingly widespread problem. Therefore, user data must be protected by metaverse platforms or they risk losing customer trust.
According to CNBC, there are reported cases of hackers stealing the lands of metaverse investors by tricking them into clicking on links they thought were real portals to the virtual universe, but were actually phishing sites set up to steal user credentials.
How To Avoid Scam In The Metaverse
There will always be new ways for fraudsters to exploit platforms’ vulnerabilities, try out new techniques, and ultimately con businesses and individuals out of their money.
Several steps can be taken before the launch of a new platform to improve defenses and keep out fraudsters.
1. Digital Footprint Analysis
When a user is signing up, it is helpful to see their digital footprint. An email address or a phone number can be used to verify the legitimacy of an account because the majority of credible users have some sort of online presence, whether it be on social media, web platform activity, or instant messaging accounts.
2. Minimize Silos
Fraudsters aren’t just winging it; they plan and strategize to find out what works best, and they share their findings with the rest of the criminal community.
It is a nightmare for risk/fraud managers because they need a complete view of the company’s information to identify connections between customers who may be at risk for fraud or theft.
Knowledge gaps between teams can have a significant impact on revenue, security, and decision-making if they aren’t addressed.
Machine learning can help organize data and automate decision-making as part of a 360-degree view of the business that includes testing multiple solutions.
3. Multi-Layered Differences
There will be a comprehensive risk management product stack for Metaverse platforms that includes machine learning.
Machine learning algorithms should be supplemented by other solutions. Using a user’s overall risk score, you can decide whether or not to allow them to join your system, log in, or conduct any transactions.
Decisions will be made by BlackBox AI, which does not require human intervention. The early stages of a product’s lifecycle are the best times to use Whitebox AI to reduce customer dissatisfaction.
Whitebox ML allows humans to pick and choose which parts of the analysis are most relevant to the particular situation at hand, which is a major factor in this.
4. Two-Factor Authentication (2FA)
It is possible for some services to enforce two-factor authentication (also known as 2FA) even if the requirements don’t match, which can lead to increased friction for users but also better security.
5. Browser And Device Fingerprinting
If you know how they’re set up, it is possible to identify emulators, virtual machines, and bots.
Hidden devices should be another indicator of potential risk, even if some metaverses are available on multiple devices, which can lead to customer insult rates again.
Computers, smartphones, and virtual reality headsets are all becoming more common in the workplace. As long as you know how a customer’s devices are configured and where they are located, it’s easy to spot potential issues.
Risk management is just as critical in the early stages of these platforms as adding new features. It’s important to build public trust and interest to avoid this.
It is possible to learn from the successes and failures of new technologies that accept alternative payment methods such as esports, online gaming, and the cryptocurrency industry, which have grown significantly in recent years.